MUMBAI: Soumyakanti Ghosh, chief economic advisor at the State Bank, has called for an added push for production-linked incentives (PLI) scheme in the forthcoming budget and its extension to small businesses given its job creation and export potentials can add up $30 billion to the GDP.
His affirmative stance on the scheme came even as many a voice, including by Raghuram Rajan, economist and former governor of the RBI, spoke against it citing the net negative returns from the scheme even in the medium term.
The Narendra Modi government had in its second term introduced the PLI scheme to boost domestic manufacturing, which has been stagnating at around 16.5% of the GDP for a over two decades, and in turn push exports offering tax incentives to companies set up manufacturing units.
The major sectors covered in the scheme includes automobiles, food products, specialty steel, pharmaceuticals, electronics/ technology goods, textiles, aviation. Thus, PLI scheme has benefited many of our commodity exports, especially mobile and electronic goods, drugs and pharma.
“PLI scheme has been a game-changer towards augmenting incremental manufacturing capacity, drawing fresh investments to the tune of Rs 1 trillion, incremental sales of Rs 8.61 trillion (mostly by Apple) of which exports being 40%) and job generation of 8.78 lakh,” Ghosh said in a note on Monday.
“Given the fact that small businesses contribute about 45% of exports and nearly 40% in manufacturing GVA, the budget should offer a separate PLI scheme for them (MSMEs) should boost the sectoral contribution further and facilitate job generation with representation from across textiles, garments, handicrafts, food processing, leather, electronics, auto components, bulk drugs etc,” he added.